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Rising fuel costs tied to the Iran war have forced policymakers across Asia to rework energy plans, often favoring immediate reliability over long-term climate goals. That recalibration is already reshaping investment and generation choices—raising the prospect that recent emissions gains could stall as countries shore up supplies.
Short-term shocks, lasting effects
When shipments through the Strait of Hormuz tightened, nations that import most of their energy saw a familiar trade-off: secure the grid now or keep faith with decarbonization pledges. Experts say the balance has swung toward the former.
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Sandeep Pai of Duke University’s Nicholas Institute for Energy, Environment and Sustainability notes that, in practice, energy security often outweighs emission targets when systems are stressed. The International Energy Agency now expects global investment in coal to climb to roughly $180 billion by 2026—the highest level in over a decade—while monitoring groups report a modest dip in coal generation even as new coal capacity grows.
How governments are adjusting
Across East and Southeast Asia, the response has mixed emergency measures with longer-term policy revisions:
- Indonesia — The world’s leading thermal coal exporter moved to maximize coal output amid higher prices, but it has simultaneously pushed an ambitious rooftop solar goal, aiming for about 100 gigawatts by 2034 from roughly 1.3 gigawatts today.
- Vietnam — Coal use has increased to meet demand, yet officials have also set targets to equip a share of public offices and homes with rooftop solar by 2030.
- The Philippines — Authorities burned more coal during the supply squeeze and declared a power emergency; they debated lifting a moratorium on new coal plants but ultimately kept the ban, allowing earlier-approved projects to proceed while households absorbed higher bills.
- South Korea — Facing potential LNG shortfalls, Seoul postponed retirement dates for several coal units, boosted output at operating nuclear reactors and accelerated maintenance to bring idle reactors back online.
- Japan — Tokyo has continued moves to restart reactors that were shut after the 2011 Fukushima crisis, a shift that previously drove increased coal use when nuclear capacity fell.
- India — New funding plans include a multibillion-dollar program to convert coal into industrial fuels and chemicals as a substitute for imports, effectively extending coal’s industrial role.
Michelle Manook, now with the industry-supported group FutureCoal, says this second major energy shock of the decade has reinforced coal’s perceived role as a strategic buffer. That perspective has translated into policy tweaks that could keep fossil fuels on the system for many years.
What this means for emissions and consumers
The immediate effect is straightforward: burning more coal or delaying plant retirements raises near-term emissions, even if renewables remain the fastest-growing source of new generation across the region. For consumers, the picture is mixed—some nations avoided blackouts, but many households faced higher electricity bills.
- Grid reliability: Short-term stability has improved where coal and nuclear output were increased.
- Climate targets: Net-zero timelines risk being pushed back as fossil infrastructure receives renewed investment.
- Investor signals: Rising funding for coal projects complicates financial flows toward clean energy.
- Social impact: Emergency measures can protect supply but often pass costs to consumers in the near term.
Brenda Valerio of New Energy Nexus in the Philippines emphasizes that recent moves do not erase progress on renewables, but they underscore that the energy transition is uneven and subject to interruptions. Luke Holt of consultancy Ramboll adds that long-range decarbonization campaigns are easily diverted by such geopolitical shocks.
Looking ahead
Policymakers now face a familiar but sharpened dilemma: build more resilient systems while avoiding lock-in of high-emission infrastructure. Choices made in the next few years—about plant retirements, grid investment and the pace of renewables—will determine whether recent climate gains hold or give way to a renewed fossil-fuel trajectory.
Reporting for this story included contributions from correspondents across the region.
